Mark Fleming-Chief Economist, First American CoreLogic
Wisniowski, Charles, Mortgage Banking
As chief economist for First American CoreLogic Inc., Santa Ana, California, a provider of collateral risk-management and fraud-prevention solutions, Mark Fleming leads the company's economic and research team from the company's Vienna, Virginia, branch.
Fleming is responsible for developing the collateral and credit-risk models that serve as the basis of the CoreLogic product suite. Those products include CoreLogic's Core Mortgage Risk Index (CMRI), a quarterly forecast of U.S. residential mortgage risk and its impact on local economies.
Fleming also has spent the last several years studying mortgage fraud and fraud-prevention strategies.
Prior to joining CoreLogic, Fleming was at Fannie Mae, where he developed property valuation models designed as part of collateral-assessment applications used in mortgage origination, quality control and loss mitigation. He also managed a model-development and implementation team responsible for maintenance and development of collateral-model production code and datasets for mortgage origination software and automated property valuation applications.
Fleming has published in The American Journal of Agricultural Economics and Geographic Information Sciences. He has also presented his work at numerous conferences, and is a member of the American Real Estate and Urban Economics Association (AREUEA), Richmond, Virginia.
Fleming obtained his master of science degree and doctorate in agricultural and resource economics at the University of Maryland, College Park, Maryland, and earned his bachelor of arts degree at Swarthmore College, Swarthmore, Pennsylvania.
Mortgage Banking recently interviewed Fleming about the results of CoreLogic's most recent CMRI for the fourth quarter of 2008, as well as his market outlook for 2009.
Q: First American CoreLogic's fourth-quarter Core Mortgage Risk Index notes that the rate of home-price decline has stabilized at around 11 percent, with almost zero acceleration in either direction. Yet, the CMRI cites a "geographic expansion of risk driven by fundamental economic conditions"--namely flat or declining wages and increasing job losses. Is this a sign that home prices are finding bottom or that the recession is trumping all other indicators?
A: It's a little bit of both. The fact is that home-price declines over the past year have been the primary driving force of what's causing markets to be higher-risk. So if all other things held equal, those markets that have had 20 [percent] to 25 percent annualized rates of decline were rising up the risk rankings very, very quickly.
That's why over the last few quarters, many California and Florida markets have [topped the] risk list. What's been notable that we have noticed in house prices is that the national number has now held steady at zero acceleration.
So while house prices are still declining at an annualized rate nationally, they're not declining at an ever-increasing pace. That's the first thing that has to happen before we can turn [things] around and begin to mitigate or reduce those rates of decline.
It's kind of like the car is in reverse and your foot was on the gas pedal. So you were going in reverse at ever-faster speeds, but now we've taken the foot off the gas. We haven't yet put the foot on the brake, but that's the next thing that's going to happen. We're going to put the foot on the brake, and the rate at which we go backwards will slow down. While that risk [of home-price declines] has stabilized, what's now coming to the forefront is the rising unemployment rate, job losses and flat wage growth.
That's the other side of the equation. House prices increase the likelihood that you'll be underwater, and unemployment and economic conditions increase the likelihood that you won't be able to make your mortgage payment. When those two things come together--being underwater and the inability to make mortgage payments--then your options are very limited and you're much more likely to go into delinquency and foreclosure. …